If the 2016 referendum was the day that the U.K. announced it wanted to break up with the European Union, the formal withdrawal at the beginning of this year was the day it finally moved out of Europe’s apartment. But like any long-term relationship, there were still loose ends. The U.K. still had a lot of stuff left in the apartment and it kept stopping by over the past year to argue over who would get to keep which books, furniture, and kitchen equipment. Now the breakup appears to be finally complete. Both parties are excited about exploring new relationships with new partners. But is it ever really over?
We’re back with a special (final) edition of This Week in Brexit:
This week in deals: To review, when the U.K. formally exited the EU on Jan. 31, it began an 11-month period in which the country remained under EU rules while it negotiated a deal for future trade between the two. It wasn’t much time to negotiate a major trade deal, even if talks went smoothly. And they did not go smoothly. Prime Minister Boris Johnson had consistently argued that it was possible for Britain to continue to enjoy trade access to the European market while avoiding European regulations, a stance he now amusingly describes as “cake-ism.” But European negotiators weren’t all that inclined to let Britain enjoy all the economic benefits of EU membership without any of the obligations.
The last time this column checked in, in September, things were not going well. The two sides remained far apart on a number of key issues, the British government was openly threatening to violate international law, both sides were somewhat distracted by the COVID-19 pandemic, and a potentially devastating “no-deal” Brexit was again looking likely. Nonetheless, Johnson refused to even consider extending the deadline.
In the end, the two sides did what they’ve done throughout this process: They insisted that there was no room for compromise until finally compromising at the last minute. A deal was announced on Christmas Eve, just a week before the final deadline. The deal has now been approved in writing by ambassadors of the 27 EU member states, and Britain’s Parliament will vote on it this week.
This week in changes: A few things will change right away. A new British immigration system will treat EU citizens the same as people from anywhere else in the world, meaning they will no longer have the automatic right to work in the U.K. The immigration system will be based on points, prioritizing “skilled” immigrants with high incomes and graduate degrees.
On the other side, British citizens will lose the automatic right to live and work in Europe. Vacations will still be possible, at least once COVID restrictions are lifted, but visas will now be required for Britons to stay in EU countries for more than 90 days. British students will lose access to the popular Erasmus exchange program, which provided grants for study in European universities.
Many businesses are probably relieved just to have some certainty, but they also don’t have much time to prepare for the new regulations and customs rules going into effect next week. Customs declarations are now required for goods crossing from Britain into Europe, and animal products will require even more paperwork. (Britain isn’t instituting full import controls on goods from Europe until July.) This could lead to delays at channel ports.
Both sides may have gotten a preview of this last week, when France temporarily shut down border crossings from the U.K. over concerns about a new variant of the coronavirus, stranding hundreds of trucks in Dover. Consumers may also see additional costs for many European goods.
On the plus side, the British government will now be able to scrap the much-hated “tampon tax” on sanitary products, as it was previously prevented from doing so by EU rules.
In the longer term, the government will now have more freedom to negotiate trade deals with other countries, including the U.S.
Even though leaving the EU with a deal will be much less economically damaging than leaving without a deal, some forecasts still predict Brexit will shave as much as 4 to 5 percentage points off Britain’s GDP in the coming years.
This week in the details: The deal allows continued trade in goods between the two sides without tariffs or quotas—avoiding what could have been a devastating economic blow. But it only came to pass thanks to some key compromises.
One of the big compromises was over fish. The U.K. originally sought to reduce the amount of fish caught by European boats in British waters by 80 percent, but the final deal reduces it by just 25 percent, with the changes phased in over 5½ years. The leading U.K. fishing industry group accused the government of having “caved in on fish.”
Another bone of contention was the so-called level playing field issue: ensuring that businesses in the U.K. didn’t enjoy an unfair advantage over European competitors. Britain has agreed to continue abiding by a range of European labor and environmental regulations for the foreseeable future. This won’t make hardcore Brexiteers happy, but in an interview with the Sunday Telegraph, Johnson made clear it was a modest agreement that only ensures “the UK won’t immediately send children up chimneys or pour raw sewage all over its beaches.” If disputes arise over these regulations, they will be settled through arbitration. This was a concession from the Europeans, who wanted automatic penalties. The European Court of Justice, which hears cases involving EU law, also won’t have authority over future EU-U.K. trade disputes.
The deal doesn’t look good for trade in services, which accounts for 80 percent of Britain’s economy. This includes London’s all-important financial sector. While there are still some loose ends to be worked out here, the new restrictions on services British banks can provide to clients on the continent could accelerate the departure of financial services capital and jobs from the U.K. to Europe, a process that has already begun.
This week in borders: No issue bedeviled Brexit negotiations more than the border between the Republic of Ireland and Northern Ireland, now the land border between the EU and U.K. Imposing a “hard” border, it was feared, would jeopardize the fragile peace process in the region. In order to avoid this, the U.K. agreed to leave Northern Ireland in much closer alignment with the EU, in what was arguably Johnson’s biggest compromise: Unlike the rest of the country, Northern Ireland will remain part of the EU customs union and under the jurisdiction of the European Court of Justice; its students will also still have access to Erasmus. This is seen as a betrayal by Northern Irish unionists—the predominantly Protestant parties that favor closer ties with London—and they’ve indicated they’re going to vote against the deal in Parliament this week. The unpopularity of Brexit in Northern Ireland has bolstered Irish nationalists’ calls to hold a new referendum on reunifying the island. Would they have any chance of winning such a vote? Depends on which poll you look at.
Meanwhile, the Scottish National Party also plans to vote against “Boris Johnson’s extreme Tory Brexit” in Parliament this week. Brexit is deeply unpopular in Scotland. The SNP is also calling for a new referendum on Scottish independence. The last one failed in 2014, but, well, a lot has happened since then.
Farther afield, negotiations continue over Gibraltar, a tiny British colony on the southern tip of Spain. The EU-U.K. agreement doesn’t cover Gibraltar, the status of which is being negotiated directly between London and Madrid. Spain has long sought to regain control of Gibraltar, which was ceded to Britain in 1713, and is seeking an agreement that would tie the territory much closer to the EU, including an agreement to require passport controls for British, but not Spanish, citizens entering the territory. If a deal isn’t reached by Jan. 1, a hard border could be imposed.
This week in looking ahead: The Brexit referendum and the election of Donald Trump were the two seismic political events of 2016 and were frequently compared, including by “Mr. Brexit” himself. Both events took experts and pundits by surprise, were marred by disinformation and allegations of foreign interference, and were interpreted as signs of a backlash throughout Western democracies to immigration, globalization, and free trade, as well as of growing distrust of experts and political elites.
So, there’s some symmetry in this period of Brexit coming to a close just as Trump is about to leave office. The difference is that while many of Trump’s policies can be reversed, Brexit is now the law of the land. Still, like Trump’s antics, Brexit has maintained a hammerlock on the country’s politics and media discourse for the past four years, rivaled in recent months only by the government’s COVID-19 failures.
When Parliament votes this Wednesday, the deal is expected to pass easily: Johnson’s Conservatives enjoy a large majority in Parliament and the opposition Labour party prefers this agreement to a no-deal scenario. The EU Parliament still needs to vote on the agreement, which won’t happen until next month, but it can still go into law provisionally on Jan. 1. A number of loose ends and ambiguities still need to be cleared up, and London will continue to have to negotiate and argue with Europe just as non-EU members like Switzerland and Norway do now. But barring an unforeseen shock, this appears to be the end of Brexit as we know it. It’s probably for the best that both sides are moving on.